Should We Take Goldman's Cue on the Market?

Today, Wall Street baron Goldman Sachs (NYSE: GS) announced that it is making, along with some outside investors, a $3 billion investment in one of its hedge funds. This is certainly some news to chew on for both Goldman investors as well as investors in the GEO fund that Goldman is backing up the truck on.

However, there was more to Goldman's move than just pumping extra equity into a struggling fund. In its press release -- and reiterated in its conference call -- Goldman said that they "believe the current values that the market is assigning to the assets underlying various funds represent a discount that is not supported by the fundamentals."

In other words, there are some smokin' hot deals out there.

Of course it's tough to know for sure what Goldman is referring to in particular, but that's the fun in being an investor though, right? Getting down and dirty and finding those opportunities...

I pulled up a quick screen and found out that there are over 1,200 stocks with a market cap of $500m or more that have dropped 10% or more in the past month. Whittling it down to just those that have lost 15% or more still gave me more than 500 names, but I dug into that list.

At the top are a few stocks that you'd probably expect given the weakness in the housing market. RAIT Financial Trust (NYSE: RAS), a REIT that provides real estate debt financing, is down 63%; Beazer Homes (NYSE: BZH) lost 48%; and Thornburg Mortgage (NYSE: TMA) is off 47%.

While the housing/mortgage industry will likely deliver some good stock deals at some point, I'd still like to give that sector some time to cool off before I start shopping. There were a number of other stocks on the list that jumped out at me though as more interesting though. Below is a list of a few along with how much they've lost over the past month.

Pacific Sunwear (Nasdaq: PSUN) - 38%
Dillard's (NYSE: DDS) - 33%
Akamai Technologies (Nasdaq: AKAM) - 33%
Etrade Financial (Nasdaq: ETFC) - 30%
Rent-A-Center (Nasdaq: RCII) - 28%
Ameristar Casinos (Nasdaq: ASCA) - 28%
Bare Escentuals (Nasdaq: BARE) - 27%
Jos. A Bank (Nasdaq: JOSB) - 26%
Boyd Gaming (NYSE: BYD) - 24%
Haynes International (Nasdaq: HAYN) - 21%

Ok, so those are just a few that I'll probably take a close look at, but like I said above there's no dearth of stocks out there that are a heck of a lot cheaper than they were just 30 days ago.

So where does this leave us? That The Average Joe is a perma-bull? Well, if by perma-bull you mean that I believe the stock market will continue to go up in the long term, then yes, I am a perma-bull. I can't say for sure what the market will do over the next six months or year, but when stock prices start to fall, there are often some gems thrown out with the rubbish.

-AvgJoe